A fantasy sports league allows lay people to exercise skill in competing in an activity based upon statistics derived from actual on-field sports competition. According to findings reported in a CNN Money article posted to the Internet in December 2005 (http://money.cnn.com/2005/12/07/technology/fantasysports_fortune—121205/index.htm), fantasy sports in the United States is a billion dollar industry with at least 15 million participants.
In a typical fantasy sports baseball league, for example, each fantasy competitor might create a fantasy team based on the on-field performance of real-life Major League Baseball players, of which the competitor will be the fantasy team manager. Fantasy leagues are virtual leagues, whose competitions are based on vicarious observation of, and performance statistics from, some other activity or competition. In the example just described, Major League Baseball will be termed the underlying activity or the underlying sports league of the fantasy baseball league. The league will be set up prior to, or shortly after the start of, the actual baseball season, typically through a fantasy host (or fantasy platform) website such as ESPN.com, Yahoo Fantasy Sports, or CBS Sportsline Fantasy Sports. Competition in the fantasy league might be quite sophisticated, with players being drafted, traded, or dropped from a fantasy team by its fantasy competitor manager, and virtual head-to-head competitions being held on a regular basis. The fantasy host compiles statistics that allow each fantasy competitor to receive a score based upon various measures of performance of the on-field players during the baseball season. From the score, the performance of the fantasy competitors in the fantasy league can be ranked.
Within the sports realm, fantasy sports leagues have been formed around football, basketball, baseball, soccer, hockey, auto racing, and other sports. More generally, fantasy competitions can be constructed around not only sports activities, but also around any kind of activity in which the fantasy competitors can compete vicariously based upon observations or statistics regarding some underlying activity. A competition might, for example, be based on the performance of portfolios of stocks. We will use the term fantasy league to emphasize the concept that the underlying activity can be sports or practically any other type of activity. For the same reason, we prefer the more general term fantasy competitor over fantasy team manager.
Traditionally, arrangements to establish a fantasy league with the fantasy host are made by a league commissioner. Our use of the term league commissioner refers to a role having the traditional associated functions, rather than the title given to a particular person having that role in a particular league, which is arbitrary. The commissioner is a lay person, typically not having any formal association with the underlying activity. In this model for a fantasy league, which we will refer to as the traditional model, the commissioner recruits the fantasy competitors to participate.
A fantasy data provider provides data regarding the progress or outcome of a fantasy competition, such as statistics about the underlying activity. A fantasy host is a particular kind of fantasy data provider. A fantasy host provides services whereby the fantasy competitors in a league can compete through the host's website and typically computes the scores of the fantasy league competitors after a league ending date.
The services of a fantasy data provider or fantasy host are often provided on a commercial website at no charge or for a modest fee. The appetite of many fantasy sports participants for information about the actual sports players on their fantasy teams has been described as “insatiable,” so a fantasy host can generate considerable revenue by licensing website space for advertisements and by selling sports paraphernalia. A fantasy competitor may spend enormous amounts of time on the host's website looking for information that might improve the scoring of her fantasy team within the fantasy league. In this traditional arrangement, the fantasy host gives the commissioner considerable control over league rules, competition, and scoring. Because of this control, the commissioner can customize the league to the needs and desires of the fantasy competitors, for whom he is the representative.
In the traditional model, the fantasy competitors each pay an entry fee to participate in the league. After the fantasy competition has completed, the pool of entry fees will be split and awarded to highly ranked competitors. How many competitors will receive awards and in what percentages of the pool is a decision made by the commissioner before the start of the fantasy competition. The entry fees are collected and held by someone having the role of league treasurer. For clarity, henceforth we will distinguish the “commissioner” role from the “treasurer” role, although the league treasurer is frequently the same person as the league commissioner. After the end of the competition (i.e., in the baseball example, usually after the regular season), the treasurer is responsible for paying out the awards to the successful fantasy competitors.
The league commissioner in the traditional model is local to the league in the sense that she is an individual and not affiliated with a commercial fantasy data provider or host. The league treasurer in the traditional model is also local. Many of the fantasy competitors in the league will be personally acquainted with the local treasurer, as well as with the local commissioner. In a very common scenario, an employee in a business (e.g., an architectural firm) recruits several coworkers to form a fantasy sports league. The employee then serves as league commissioner and the coworkers are fantasy competitors. As mentioned previously, the employee who is the commissioner is typically also herself a fantasy competitor, and often also the league treasurer.
Vesting control of the rules under which team competition is conducted in a local commissioner is an advantage to the commissioner because it is a form of personal networking and bonding that will often reap benefits beyond the confines of the fantasy league. Many local fantasy sports commissioners serve in the role repeatedly out of pure love of the game. Having the league commissioner be local also benefits the fantasy competitors in ways only indirectly related to the competition. While the local commissioner exercises and shows off his organizational skills, fantasy competitors get to show off their sports and managerial prowess. The fantasy competitors also extend and improve their personal and professional networks by participation. The fantasy competitors can affect how the league and competition are configured through influence over the league commissioner. The fantasy competitors and the commissioner might even meet prior to the start of the season to jointly determine such matters as which host to use, which rules will apply, and how awards will be allocated.
Although disagreements between fantasy competitors and the person in the commissioner role sometimes arise (e.g., over scoring rules or interpretation), disputes involving the treasurer role are more common. The treasurer (who, as stated previously, could also be the commissioner) might be lax in collecting the entry fees from all the fantasy competitors. This might result in the league having fewer than the targeted number of teams from the outset. Worse, a fantasy competitor, who has still not paid the entry fee late into the season and who is performing poorly in the fantasy competition, might simply refuse to pay. Although in the traditional model most of the league competitors know the commissioner, often some of the managers are not acquainted with each other. Should they trust an anonymous third party to pay and pay promptly? At season end, the treasurer herself might be late in disbursing awards for whatever reason, or simply never pay them at all. For even the most responsible and attentive of commissioners, having to deal with the league's finances, with almost inevitably some disputes with managers over money, is at best an inconvenience that comes with the job. There is one significant advantage to having a local treasurer, however. Multiple league activities and seasons can be handled by one treasurer. This gives a benefit to long-term competitors who become familiar with expectations about fee payments and payouts, while the league has flexibility in choosing its fantasy hosts.
There is currently an alternative model for operating a fantasy league in which the fantasy host offers to serve as both the commissioner and the treasurer. Although this model resolves most of the problems arising from having a local treasurer handle the league cash, it also eliminates the significant advantage of control of the league rules and configuration by a local commissioner. Decisions traditionally made by the league are unilaterally resolved and dictated by the fantasy host, including for example: that the team must have at minimum number of fantasy competitors (e.g., 10) signed up by a cut-off date or the league will be dropped; the league payout will go to a single fantasy competitor; and competition will be conducted in only one way specified by the particular fantasy host. For its trouble, a substantial portion of the pool goes to the fantasy host rather than the successful fantasy competitors. The loss of local control in the alternative model for many participants, commissioners and fantasy competitors alike, takes much of the enjoyment out of the league.